In East Asia, where rainfall distribution varies across seasons, managing water resources and developing hydraulic systems are pivotal to advancing human civilisation. During the Liangzhu Culture period (5.3-4.3 ka BP), a sophisticated water conservancy system was constructed by Liangzhu humans in the northwest of the ancient city, featuring a high dam reservoir area near the mountain and a low dam area in the southeast. The Liangzhu Hydraulic Enterprise was one of the world's earliest examples of dam systems; however, its environmental context for development and response to human activities remains unclear. Here, we present detailed results from an analysis encompassing the sedimentology, pollen, and phytoliths from profile MFL2019 within the Liangzhu Mifenglong High Dam. Our findings indicate that between 8.0 and 5.3 ka BP, the Liangzhu area was characterised by fluvial sediment and predominantly comprised of evergreen/deciduous broad-leaved forest vegetation with a warm and humid climate. A shallow wetland environment emerged during 5.3-3.2 ka BP, with a shift to drier conditions and increased occurrences of extreme precipitation events. From 3.2 to 2.0 ka BP, an underwater reduction environment prevailed, although the climate became increasingly arid. Since 2.0 ka BP, the sedimentary facies transitioned from static water deposition to weakly oxidised deposition exposed to the ground. During this period, there was a decrease in the proportion of evergreen forest components and an increase in deciduous components, indicating a trend towards a drier climate. Simultaneously, secondary vegetation and cash crops related to human activity appeared. During the Liangzhu Culture period (5.3-4.3 ka BP), humans adapted to local conditions by transforming intermountain wetlands into reservoirs to address flood control requirements, drought relief, and waterway transportation. Pollen data from this period show an expansion of wetland vegetation but a decrease in the proportion of woody plants. Combined with the broad-leaved wood remains excavated in Liangzhu Ancient City, this may indicate that nearby broad-leaved trees were cut and transported to Liangzhu Ancient City for construction. During the late Liangzhu period (4.5-4.3 ka BP), the unstable sedimentary environment and the cooling and drying climates likely contributed to the cultural decline of Liangzhu. Consequently, the reservoir was abandoned, and mountain vegetation reverted primarily to evergreen broad-leaved trees. Against the backdrop of increasingly arid and deteriorating climate conditions, the Liangzhu people's transformation and utilisation of wetlands represent a quintessential case of prehistoric civilisation adapting to environmental changes, thereby playing an important role in facilitating human society's adjustment to adverse climatic environments.